Sorting through credit card offers? Here are 5 things to know

Charlotte Observer (NC)

Jan. 27--It's not your imagination -- you are seeing more credit-card offers on television commercials, and perhaps in your mail.

With rewards ranging from flights and hotel rooms to cash back on groceries and gas, the wave reflects how banks and card issues are working harder than ever to get your business.

Competition is so high that some cardholders can use those mail offers to negotiate better deals on existing cards by asking for lower interest rates, according to CreditCards.com senior industry analyst Matt Schulz.

"It's basically the best time there's ever been to get a new credit card," Schulz says. "It's such a competitive time. The banks are really bending over backwards to get new customers and keep current ones."

Experts say reasons for this include the stronger economy. And U.S. consumers are managing debt better. Credit bureau Experian says the nation's average credit score improved in 2016 -- at 673, the score is up four points and is only six points away from the average of 679, in 2007, right before the recession. (On a credit scoring range of 300 to 850, 630 to 689 is considered average credit, while 720 and up is excellent, according to personal finance website NerdWallet.com.)

Charlotteans average a 661 credit score, and hold an average credit card debt of $5,499, about $50 lower than the national average, according to Experian. "It says that people are managing their credit well -- and credit card companies are competing for business," says Rod Griffin, director of public education.

If you haven't been paying attention to the credit card boom, here are five reasons why you should:

1 If you still have Christmas bills, pay them off now.

The Federal Reserve raised its benchmark interest rate for banks in December and more hikes are expected. Credit cards' interest rates rise along with these increases.

"As a consumer, you're going to pay more if you're carrying a balance," Larson says. "That's definitely something to keep in mind if you're carrying a balance after the holidays."

Rising rates, Schulz says, "is reason No. 2000 to paying your credit card balances down......That's why it's important for folks to stay ahead of the game and pay their balances off as quickly as possible."

2 Banks you do business with may give you extra perks on your credit card.

Holders of Bank of America's travel rewards card receive extra points on purchases if they have an active checking or savings account.

Wells Fargo customers can redeem their rewards at a Wells Fargo ATM, or apply rewards to their own accounts at the bank, such as paying down a mortgage.

"If you're a banking customer, they make it increasingly lucrative to use their products," says Erik Larson, president of NextAdvisor.com, a consumer information website.

Larson says banks also are giving more chances to people with lower credit scores.

"We have seen in general, banks starting to get a little bit more lenient...to make them available to more consumers," he says. "They don't have to have excellent credit."

3 It's become popular among some to sign up for multiple cards to get the most out of travel and cash-back perks.

But experts say before you consider doing this, know your spending habits -- and your ability to organize.

Card users must meet a minimum spending threshold in order to get those perks. For some travel cards, that spending requirement could be $4,000 over the course of 90 days, for example.

Since rewards are high, Schulz says some people will take on dozens of cards to take advantage of all that's out there. They'll create spreadsheets showing when they're due, how much they have on them, and when offers expire.

"Credit card churning and reward chasing can be really lucrative if you handle it properly and if you know what you're doing," he says. "But it can cause real trouble if you don't, and the last thing that anyone should ever do with a credit card is overspend just to get credit card rewards, because you are then asking for trouble."

4 You can clear up your existing credit card debt faster.

Jarret DiToro, senior director of content marketing for Charlotte-based LendingTree, which matches borrowers with lenders, says card holders with debt should consider offers that allow transferring balances to cards with zero-percent interest rates for a year or more.

You'd need a certain credit score to be eligible for these cards, so if you're "drowning in debt, you probably won't be approved," DiToro says.

Consumers should be aware if new purchases they make on these cards are covered under that zero-percent interest rate, or higher rates.

Also, some of these cards charge an upfront fee, usually around 3 percent of the balance being transferred. But "sometimes it's worth it" if you have a lot of debt, DiToro says.

5 What's to come?

Experts say while it's hard to predict if the wave of good credit card offers will continue, keep opening your mail if you get offers.

"I think issuers are going to continue to be more aggressive, coming out with new products, but also improving" offerings, Larson says. "If (you're) in the market for a card, definitely keep your eyes out."

And be prepared to nab those cards with perks by knowing your credit status ahead of time, Griffin says. Consumers can get a free report every year at annualcreditreport.com.

"In every instance, your credit report and your credit score is going to play a role in...the offers you receive, Griffin says. "So understanding your credit score really puts you in the driver's seat."

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